India’s oil demand rises to record high

New Delhi / Bloomberg

India’s fuel demand grew 11 percent in the year ended March 31, the fastest pace in records going back to fiscal 2001.
Fuel use rose to 183.5 million metric tons from 165.5 million tons in the previous period, according to preliminary data on the website of the Oil Ministry’s Petroleum Planning & Analysis Cell. Diesel consumption rose 7.5 percent to 74.6 million tons, while gasoline usage rose 14.5 percent to 21.8 million tons.
“Gasoline growth has been unprecedented and has even surpassed our own expectations,” Arun Kumar Sharma, finance director at Indian Oil Corp., India’s biggest fuel retailer, said in New Delhi. “People are preferring gasoline more than diesel as the price difference between the two has narrowed.”
Gasoline is taxed higher than diesel in India, resulting in the former costing more at retail pumps. The differential narrowed to about 25 percent in April from 34 percent in January. India is replacing China as the world’s oil-demand growth driver as its economy expands faster than any other major country and a growing middle class has more money to spend.
The International Energy Agency estimates India to account for a quarter of global energy demand growth by 2040 as booming manufacturing and a bigger, richer and more-urbanized population will drive fuel growth. It expects the country’s oil demand to reach 10 million barrels a day in the next quarter of a century, marking the fastest growth in the world.
“In addition to the boost from low oil prices, structural and policy-driven changes are underway that have resulted in India’s oil demand ‘taking off’ in a similar way to China’s during the late 1990s,” analysts including Amrita Sen at Energy Aspects Ltd. said in a note. “These changes include a rise in per capita oil consumption, a massive programme of road construction and a push towards increasing the share of manufacturing in GDP.”
Indian Oil, which controls more than half of fuel sales in the country, expects gasoline sales this fiscal to climb 11
percent and diesel by about 3 percent, Sharma said.